The Government has pledged to cut VAT on “e-newspapers” and impose a new levy on tech giants such as Google and Facebook.
The measures were announced today in the Government’s first budget since Boris Johnson’s general election victory in December.
Press Gazette understands the VAT saving will apply to all paid-for digital news content, which includes rolling-news websites that sit behind a paywall and digital editions.
The budget sets out that “e-newspapers” are “entitled to the same VAT treatment as their physical counterparts”.
Print newspapers already benefit from a zero rate of VAT.
The Government said the zero-rate for digital publications, which also applies to e-books, will come into effect from 1 December this year, pending a 12-week consultation on the draft legislation.
Chancellor Rishi Sunak has also introduced a new two per cent tax on the revenues of search engines, social media services and online marketplaces “which derive value from UK users”.
The new levy will take effect from 1 April this year.
It will apply when a group’s worldwide revenues from digital activities are more than £500m, of which more than £25m is derived from UK users – that is they either use the service or consume its advertising.
A group’s first £25m of revenues derived from UK users will not be subject to the tax, however. Financial services providers will be exempt.
Also in the budget, the £1,500 business rate discount for local newspaper offices in England has been extended until 31 March 2025.
A new tax on plastic packaging that does not contain at least 30 per cent recycled plastic could also affect publishers who use it to wrap newspapers and magazines on newsstands and copies delivered door-to-door.
A number of publishers have already switched to more environmentally-friendly packaging, however.
Tax relief for digital newspapers was first agreed by European finance ministers in 2018, although Britain has now left the EU.
Trade body the News Media Association has previously said the tax cut will save the news media industry “millions annually”.
News UK successfully argued at a tribunal in January that digital editions of the Times, Sunday Times and Sun should enjoy a zero rate of VAT.
Picture: Victoria Jones/PA Wire